Gsr Swap - I Put My Money Where My Mouth Is..

Is it just me or does that chart resemble a huge tidal wave about to crash into NYC. Funny

I totally agree.. it's a bad idea to buy a depreciating asset. Not that my crystal ball is better than any other person's but I believe we're at or near the very bottom for silver ... but that's just MY opinion.

I also want to say that when it comes to "swaps" the actual price is much less of an issue... and here's a rudimentary example.
The other day I basically exchanged 1.5 oz of gold for silver... now I didn't have a full 1.5 ounces of gold so I used cash to make up the difference.
G(1) : S (80) 1.5 : 119 (should be 120 but there are fees and premiums)


Later if/when the GSR drops to 45 I will make the swap back...

G(1) : S (45) X : 119 x = 2.64 (to make things easy lets just say 2.5)

So if all things work out... I will have taken the value of 1.5 oz of gold and turned it into 2.5 oz.

Now the amount of what you can buy with gold has for the most part always been a constant... So if one ounce of gold could by you x amount of rice.... regardless of inflation/currency exchanges etc. 20 and 50 years later the same ounce of gold will buy relatively the SAME amount of rice or other commodity.

And it's because of that I don't really care what the PRICE of silver or gold is.. I know that when I swap back and forth I'm gaining physical metal that relates to gaining value... be it monetary or for rice or what ever else you deem has value.

When it comes to buying silver or gold... my best advice to you is shop around... the best thing about the internet is that it has created a global market that you have access to in the comfort of your own home... I recommend going with people or companies that have a fantastic reputation.

When it comes to selling metals... just make sure you're safe!




I look at the historical charts, but only to give reasons as to WHY the POS (price of silver) changed. I don't believe in cycles or waves or any of that.... looking at the past can't predict the future... it can only teach us the what and why...

having said that historically the GSR has rarely hit 80... does that mean it won't go higher? (NOPE could still go up.. in fact it could go all the way to 100!! or more)

Historically the GSR has dropped below 45 3-7 years after a peak will that happen here? (Can't tell you that either! At one point it was very common to see a 1:20 GSR... perhaps as time goes on the GSR will naturally increase..)

What I do see is an opportunity. I like the price of silver right now.. I think silver hit bottom near $14 and it has started to gain price action... So even if the GSR doesn't drop.. I do believe that the price of silver is still going to go up. Either way there's value to be gained.

I hope your trade works out well . . . as I mentioned in the other thread I don't feel great about trading my modest amount of gold for silver as I have worked hard to DCA it down - more successfully than I have been able to do with silver. That being said I may wait out this swing - if it is done as it could go to 100:1. Not unreasonable in $CDN. Thinking about silver dropping to $15 and gold to $1500 . . . not out of the question at this point. I think if we ever see 45 or 50:1 I would have no problem trading some Ag for Au.

Interesting how GSR works. I never thought about that, you have given me a new perspective. I have buy and sell, but not trade.

Very interesting thread! Nice to educate myself about trading, since I like to do that (although right now it is just with numismatic items and junk silver so definitely not on the level to do anything really with gold yet). Thanks for the info!

aghawk: Dollar cost averaging is a losing strategy. It only works if you are 100% certain price point will come back again. When it comes to most investments, albeit PM's or equities it's never guaranteed that the price point will ever return.. furthermore EVEN if the gains do come back you're ALWAYS better buying on the upswing. With the use of stop-losses and only buying on the upswings you'll do a whole lot better...

I'm going to use your example in a very simplified way using increments of $5.

Let's say silver was at $30 and you first bought silver, it moved up to $35 you bought some more, it peaks at $40... you bought some more. Then goes down to $35, $30, $25, $20, and finally to $15.

Once again for simplicity let's just say at each point you bought $100 worth.

$30 - 3.33 oz
$35 - 2.85 oz $200 for 6.18 oz - $216 in value
$40 - 2.5 oz $300 for 8.68 oz - $347 in value
------ Now the drop in price ----
$35 - 2.85 oz $400 for 11.53 oz - $403 in value (if you sold instead of bought at this point net gain would've been $3)
$30 3.33 oz $500 for 14.86 oz - $445
$25 - 4 oz $600 for 18.86 oz - $471
$20 - 5 oz $700 for 23.86 oz - $477.2 in value
$15 - 6.66 oz $800 for 30.52 oz - $457.8 in value

This is the best way I can show that while you're buying a depreciating you're just spending good money over bad!
The ONLY thing I can say that you were doing that was improving your situation is that you were buying and flipping some of your silver which does bring your DCA down for sure... but is a completely different issue ... as it's SELLING and not BUYING.


Now let's say you buy on the way up again.. but impose your stop loss... then start keeping cash...

$30 - 3.33 oz
$35 - 2.85 oz $200 for 6.18 oz - $216 in value
$40 - 2.5 oz $300 for 8.68 oz - $347 in value
- Now it starts going down-
$35 - 2.85 oz $400 for 11.53 oz - $403 in value
$30 3.33 oz $500 for 14.86 oz - $445 in value (let's say at this point you sell)
$25 you don't buy you have $445 from the sale +$100 more in cash = $545 in cash
$20 you now have $645 in cash
$15 you now have $745 in cash
-- now let's just say price starts going up----
$20 At this point if you invest most of the $745 you would have 37.25 oz (That's still more oz of metal than previous metal and buying down)

Or you buy some base like $500 and use the balance to buy incrementally on the way up....
$20 -buy $500 /w $245 in cash with 25 oz
$25 -buy your normal $100 at this increment and use another $100 from cash (still have $145 in cash) 33 oz at
-at this point you're $700 invested and $825 in value

Even if silver at this point lagged for awhile and you saw a different opportunity you could sell.. for the $825 with the additional $145 you have in cash for a total of $970 in your pocket....

MAIN point is you don't always have to buy at the bottom... just buy on the upswing.. you don't always have to sell at the top.. just make sure you have a stop loss point... understand your commodity or particular equity that you're wanting to invest into... understand how much it may swing in short term but understand the overall long term trends and you'll be find..

I'd highly recommend reading YUP's post https://goccf.com/t/142068

Great questions!

... so first let's talk about premiums....

Rule #1 is if you can reduce the amount of money you have to pay where you're not getting anything for it.. the better...
So look at your sources of supply for silver and if possible find some with the lowest premiums.

Now I just recently looked at my LCS... spot at this very minute was $25.51 (Canadian funds) and they're selling silver (Standard SML's) for 29.05 a piece for counts under 100.

-Bars and basic rounds would be cheaper but my LCS doesn't always post those prices..

This means for me the premium would be 29.05 - 25.51 = $3.54 per round.. So the LARGEST premium is around 12% of the purchase price.

So let's say for sake of things you buy 100 oz @ $26.50 plus a $3.50 premium (for a total of $30 per oz) This means the total cost of the metal will be 30 x 100 or $3000 dollars.

Now let's just say the time of purchase the GSR was 80:1 (this would put the price of gold at 26.50 x 80 = $2120)

Now let's just say the price of silver rises to the point where the GSR is 45:1

So let's just say for simplicity sake that gold remains at the price of $2120 but the price of silver went up to meet a 45:1 ratio means price of silver would now be 47.11

You sell your silver for spot price w/o any premiums which means you now have 100 oz x $47.11 = $4711

You then buy gold at that price. $4711 (premiums are generally around $50 per oz.) Which will net you 2oz of gold (technically 2.2oz) and cost you $100 more in premiums

Now let's just say the price of gold still remains the same at 2120 per oz but the price of silver drops and the ratio goes back to 80:1. You Sell your 2 oz of gold and you get $4177 and buy silver which now would be back at $26.50

Assuming that there's still a $3.53 premium you will now have 139 oz in your pocket after paying premiums 2x for the silver buy and 1x for the gold buy.

So swapping at 80:1 then at 45:1 and back again at 80:1 will net you almost 40% more in hard metal.

Now you can sometimes sell the silver yourself slightly above spot but still undercutting your LCS premiums and you'll get buyers. Conversely you can purchase silver privately at around spot minimizing premiums. (just know what you're buying and beware of fakes)

On your point of "semi-numismatics" ... I really hate that term! If your LCS is willing to sell you a piece at X but only buy it at Y ... you really should be scratching your head!

I think of buying gold and silver like buying any other commodity or equity. Numismatics are a different ball game completely!!! Don't mix the two and don't let someone convince you of some grey area that combines the two. Perhaps right now there's hype for elephants or pandas or some other type of "semi-numi" but you can't say that "premium" will hold 5,10 or 15 years later. But for .9999 fine silver.... you ALWAYS know it will follow the price of spot! So if you want to buy semi-numis that's great.. but buy, flip, rinse and repeat but that's a completely different ball game than PM's and GSR swaps...Not saying you can't make a profit from semi numis... just saying the market trends on interest which is harder to track and predict.

Hope that helps and clarifies your questions...